British Airways has announced its intention to close its main defined benefit pension scheme, the New Airways Pension Scheme (NAPS).

The airline confirmed yesterday, 7 September 2017, that it seeks to close the scheme to future accrual. The proposals are part of a consultation that will be ongoing over the coming weeks.

British Airways said: "It is the largest of all UK company pension deficits relative to the company's overall financial value.

"In 2017 alone, the airline will pay £750m in pension contributions and has already committed to provide between £300m and £450m a year till 2027 to address the NAPS deficit.”

British Airways noted that it has contributed £3.5bn into the DB scheme since 2003, however, the deficit had grown to £3.7bn by March 2017.

"If NAPS remained open to future accrual, the cost to the company of providing future benefits to NAPS members could rise to 45% of individuals' pensionable pay in 2018 - more than four times the typical employer contribution of UK airlines."

It added: “We will be proposing new pension arrangements that will improve benefits for the majority of UK colleagues.”

In response to the proposal, workers unions Unite and GMB issued a joint statement noting their “dismay and bitter disappointment at the news.”

“Thousands of loyal and long serving staff, who have helped build British Airways into a world class flag carrier for this country and one of the most recognisable global brands, now face uncertainty in their retirement,” the unions said.

“Our team of financial analysts has worked tirelessly with the airline over the last few months to explore ways to keep the pension scheme open and secure it for the future.” Nonetheless, the unions are dismayed by the fact that their advice has “gone unheeded” as it has been unsuccessful in convincing British Airways to keep the scheme open.

“Instead of certainty many will now face uncertainty as their retirement approaches. We would expect better treatment of its own staff from such a ‘premium brand’. Both unions jointly demand urgent talks to discuss both the impact of this announcement, if a solution can be found and, if not, the consequences the airline may face.”

In the company’s full year results released in February, it was revealed that the deficit of both the New Airways Pension Scheme (NAPS) and the Airways Pension Scheme (APS) soared by €481m from €508m at the end of June to €989m at 31 December 2016.

Of the two schemes, which are both closed to new members, the increased deficit was largely driven by a rise in NAPS liabilities from €18.5m to €20.4m in the last year while assets rose from €17.9m in 2015 to €18.4m in 2016.

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